How to Value Your Business in Ten Minutes
A Significant Number to The Business Owner’s Family
There’s one question that I’m repeatedly asked by business owners considering the sale of their business: “What’s my business worth?” Whether a business owner wants to sell the company right away, or just wants an idea of the value of the company for a future sale, this number is probably going to be significant to the business owner’s family. It’s going to be “significant”, and it’s often lower than expected [or hoped].
For the 22 years that I owned and operated my printing business, I had the same question. Even though the business frequently under-performed financially, I “hoped” that someone was going to pay me big bucks to own the company that I had labored over for so many years. I hoped the value was going to be significantly higher than I intuitively knew it to be. But I thought the universe rewarded years of hard work with a financial reward; that buyers would recognize the “goodwill” created by a business with longevity; that buyers would like to buy the train that I had built and loaded with fuel. But the market is harsh.
There are many businesses to choose from, and buyers don’t care how long the business has been open. They don’t care how many hours the business owner worked – early in the morning or late at night. They don’t care how much the business owner sacrificed their family life by focusing on their business. They don’t care how much potential the business owner feels the business has to grow and prosper. Buyers have only one thought: “Show me the money!”
Buyers only want to know: (i) how much cash the business owner generated the previous year, and (ii) how likely that money is going to stream in for the foreseeable future.
And, since the acquisition of over 95% of businesses valued between $1 and $10 million is financed by banks, what bankers think is vital to the value of the company. And bankers, wanting to keep employed, only care about getting their loan paid back. So, what is the one thought bankers have before they approve the loan? “Show me the money!”
Rather than just “wishing and hoping”, business owners need to know the real market value of their business. And, here’s a tool they can use to calculate the maximum value of their business – for businesses valued between $1-$10 million.
The Summit Acquisitions Group — Business Brokers and M&A Advisors — specializes in the sale, appraisal, and financing of privately owned companies ranging in valuation from $750,000 to $25,000,000. Contact their offices in Atlanta, GA or Charlotte, NC for a free consultation.